Public Policy and Electricity Transmission Planning

Public Policy

The transition to renewables is a pathway toward transformation of the global energy sector from fossil-based to zero-carbon by the second half of this century. At its heart is the need to reduce energy-related CO2 emissions to limit climate change. The energy transition will be enabled by information technology, smart technology, policy frameworks and market instruments.

There are significant opportunities as well as technical, engineering and social challenges ahead as Australia transitions to a clean energy future.

The Australian Energy Market Operator’s Integrated System Plan is a whole-of-system plan that provides an integrated roadmap for the efficient development of the National Electricity Market (NEM) over the next 20 years and beyond. This will ensure any new transmission investment is developed efficiently, where it is most needed and at lowest cost and greatest benefit to customers.

It is important to recognise that transmission line projects, the scale we are about to experience, have not been built in Victoria for close to four decades. As such, there is a notable lack of planning policy for new transmission.

Forty years ago, transmission planning policies did not fully appreciate ecological, biological, social, economic, cultural or communities impacted by electricity transmission lines. Instead, project proposals stumbled upon regulatory intervention, community opposition, and last-minute litigation because impact considerations had been left until the final siting phase. Most existing planning policy and resilience framework has a strong focus on activities around existing infrastructure, not new. Adopting this historical framework will result in reactive planning and mitigation measures rather than a proactive approach.

We cannot afford to approach the transition to renewable energy the same way we rolled out large-scale transmission lines four decades ago. By not considering more viable solutions, Network Planners, Operators and the Victorian Government will fail the economy, renewable investors, energy consumers, Victorian communities and the future of our energy grid.

In response to evolving public expectations for the electricity system, regulators now require both the needs of communities and developers to be considered in renewable energy zone (REZ) design; and align the REZ objectives being pursued at a state level with the actionable Integrated System Plan to ensure REZ developments are part of the optimal development path for the broader power system.

Accounting for the full range of obligations, which include engineering resilience, safeguarding reliability, reducing carbon emissions, maximising economic benefits, facilitating renewable generation technologies and avoiding unnecessary impacts on landscape and the environment, will be critical. There is much work to do, especially when accounting for socioeconomic and environmental concerns. Recognising the need for public and environmental policy and developing new methods to apply this early in project development will minimise risks to project investors, better serve the environment and public interest.

According to the Energy Security Board (ESB), Preliminary design reports must include proposed designs, construction route, cost estimates, consideration of non-network alternatives and a community impact assessment to give local people opportunities to put forward relevant information.

The first of Victoria’s large-scale transmission projects is currently progressing through the Environment Effects Statement (EES). Push-back from communities, concerned about the cumulative environmental effects of overhead transmission, is fast becoming recognised as a major contributor to material project delays, increased project costs and likelihood projects may not even proceed. Opposition to projects across the country, signals a significant challenge that will be faced by every new transmission project unless enhanced regulatory framework is developed, new planning policy adopted, and community stakeholders are permitted to actively participate in the decision-making process from a projects inception.

This is not about blocking the transition to renewables; it is about doing it right.

Energy regulators have an opportunity to develop transmission policy relating to setbacks, resilience, environmental protection, and to adopt an innovative community guided approach that seeks to mitigate socio-economic and environmental impacts and expedite project delivery. Developing and adopting this framework will streamline infrastructure investment, will unlock investment in renewables and will increase the overall net benefit to Victorian economy and energy consumers.

By not accounting for cumulative impacts and disbenefits associated with transmission, we risk undermining economic values derived from regional communities and from the environment.

Emerging approaches and geospatial tools can improve transmission planning and provide the foresight needed to engineer robust projects. Early stakeholder engagement can help identify potential concerns within a particular solution, or route selection and help avoid conflict and litigation. This should accelerate the development and construction of well-located transmission needed to serve remotely constrained renewable energy resources that are becoming an increasing part of Australia’s electrical supply mix. Policy makers need to urgently address a range of subject matters which include:

  • A need to apply internationally guided best planning practices during initial investment tests, rather than the project proponent having to deal with the consequences of ill-conceived corridor selection and associated project rejection
  • A need to develop policy and legislation that clearly defines minimum Setback Requirements for any new transmission infrastructure. Currently no minimum requirements exist. This has led to poor route selection and much community anguish
  • A need for reformed RIT-T framework that allows consideration of all options including batteries, distribution-based solutions, HVDC and undergrounding and economic disbenefits to determine the true net market benefit.
  • A need to ensure that transmission route selection does not lead to resilience deterioration to transmission infrastructure, biodiversity, or communities

Generation projects take less time to build than transmission lines, so smarter planning that leads to shorter development times for transmission will benefits utilities, their customers and investors who are developing multibillion-dollar renewable energy projects. Recent experience has demonstrated how, left unaccounted for, land-use and environment impact consequences can represent a significant risk to investments. Take, for example, TransGrid’s HumeLink proposal, a new 500kV transmission line which will carry electricity to customers from new generation sources, including the expanded Snowy Hydro scheme. It will connect Wagga Wagga, Bannaby and Maragle.

HumeLink’s estimated cost has increased from $1.3 billion in the draft assessment 18 months ago, to $3.3 billion. TransGrid say the final cost could still be up to 50 per cent more than that.

HumeLink will be by far the most expensive transmission project in the history of the Australian electricity industry, connecting both the biggest generator to the market in more than three decades and the biggest single load ever. A similarly sized transmission project, ‘VNI-West’, will be needed if Snowy 2.0 is to have unconstrained capacity to Victoria, but that has not yet been formally proposed or costed.

The cost of HumeLink and VNI-West can be expected to have a big impact on consumers. HumeLink alone will increase NSW transmission tariffs by about 40 per cent. It will adversely affect all electricity consumers but will have the biggest impact on large consumers for whom transmission charges are proportionately a much larger part of their electricity bills.

Adding the cost of HumeLink and VNI-West to that of the pumped hydro plant itself will take the latest estimate of the total cost of Snowy 2.0 and the consequential transmission to at least $12 billion.

A recent review of the HumeLink Project Assessment Conclusions Report by the Victoria Energy Policy Centre (VEPC) indicated that using existing easements, or adjacent land, could save hundreds of $millions and minimise environmental and landholder impacts. The VEPC also recommended that undergrounding should be seriously considered, either in part or whole (with HVDC), particularly where land of high value is likely to be affected.

Another new potential project worth mentioning is the Western Victoria Transmission Network Project (WVTNP). The project proposes a new high-voltage transmission line starting at Bulgana in Victoria's west and covering approximately 190km to Sydenham in Melbourne's north-west. the project will enable the connection of new renewable energy generated in western Victoria into the National Electricity Market and increase the Victorian transmission capacity.

The WVTNP has experienced considerable push-back from communities and concern among industry stakeholders, investors, and energy consumers about the projects viability. The projects gross market benefit was estimated at $670 million through the Regulatory Investment Test for Transmission (RIT-T). Due to the greenfield site, cumulative environmental impacts, and challenging topography, it is highly likely that project costs, once determined, will exceed market benefit. Resulting in a 'dead weight' loss to the Victorian economy.

In the case of the WVTNP, the fact the Australian Energy Market Operator (AEMO) was not required to consider environmental or socioeconomic impacts during the RIT-T highlights a fundamental planning flaw. Oversight has allowed the WVTNP to enter the 'safe haven' of the Environmental Effects Statement (EES) process, the primary purpose of which is to avoid impacts in the first place. As AusNet Services (the proponent) can no longer avoid impacts, they will only be required to minimise them. This is not a least-regret approach, nor does it represent best-practice planning. Had constraints been identified during the RIT-T process, the current project corridor would not have been selected. Utilisation of existing easements or transport corridors and undergrounding with HVDC, would have clearly provided an optimal solution.

As we transition away from coal-fired electricity generation to renewables, it is extremely important that community-guided policy and framework lead this transition.

Current lack of planning policy and gaps in the regulatory framework is leading to poor decision making and ill-conceived projects that will impact on the NEM for generations to come.

Projects such as the WVTNP and HumeLink highlight concerning gaps in the current transmission planning and investment test framework that have resulted in material project delays and considerable cost blowouts. It is highly likely these projects already are, or will become, a 'dead-weight' to the Australian economy.

Something needs to be done now, before any projects are delivered, or further RIT-Ts complete, to better consider the whole-of-system plan and future proof our national grid. We cannot afford to treat this transition the same way we did when large-scale transmission lines were constructed four decades ago. The current investment test for transmission is failing the economy, investors, consumers, communities, and our future energy grid.

A new benchmark in renewable energy transmission

A great example of an international transmission proposals that is setting the new benchmark in renewable energy transmission is SOO Green. The SOO Green HVDC Link is a first-of-its-kind electricity transmission project that will install state-of-the-art high-voltage direct current (HVDC) transmission cable underground along existing railroad corridors. SOO Green is pioneering an innovative model for developing transmission infrastructure to deliver renewable energy long distances to customers across the Eastern U.S. that virtually eliminates the visual, land and environmental impact of above-ground transmission lines. SOO Green will enable the development of new, low-cost renewable energy resources while enhancing the power grid’s reliability and resilience.

As the first underground long-distance HVDC project in the United States, the SOO Green HVDC Link is pioneering a new model for sustainable transmission development that avoids environmental impacts associated with traditional aboveground transmission lines. By installing the conductor cable underground along existing railroad right-of-way and other transportation corridors, SOO Green reduces the need for tree clearing and eliminates threats to sensitive species such as migratory birds, bats or native plants.

In addition to bringing 2,000 megawatts of clean energy to market, SOO Green HVDC Link also provides essential system-level benefits to help ensure a reliable and resilient power grid. These benefits are realized by sourcing renewable energy from a broad geographic region in the Upper Midwest, by installing state-of-the-art conductor cables underground, and using advanced power conversion technology.

New 'Business as Usual'

Whether new infrastructure is needed to serve remotely constrained renewable resources or as additional transfer capacity to drive down regional prices, early consideration of land use and environment should be the new ‘business as usual’. Planning agencies and network developers should invest in improving analytic and technical capacity to address these issues by developing better decision-support tools. Effective decision-support systems provide the means by which competing public policy objectives can be accommodated and are essential tools in an increasingly policy-driven environment.

Transmission planning increasingly will be driven by a fuller range of public policies, social licence, and priorities, both state and federal. Policy needs to provide the stimulus to transmission planners to make those objectives a significant part of the planning process. It is vital we understand that public policy objectives need to include environmental and energy policy objectives. The number of state and federal initiatives to imbue land use and environment considerations earlier in the planning processes needs to grow considerably. The convergence of these state and federal trends, as well as new modelling tools and analytical methodologies should be implemented by planning authorities across the nation.

Transformative investments will be needed to build a grid for tomorrow’s energy needs. To build a strong network that supplies reliable power and works with environmental and cultural resources, these investments must be guided by policies that learn from experience and minimise last-minute surprises. Socioeconomic and environmental planning holds the key to better projects that will be completed more expeditiously with broader overall support and better ecological, carbon-reduction and community outcomes.

We cannot afford to approach the transition to renewable energy the same way we rolled out large-scale transmission lines four decades ago. It is no longer acceptable to bulldoze a path from A to B and string overhead lines, simply because it's cheaper. As Victoria and our nation seeks new solutions to its energy needs, it is time to use the best information that can inform infrastructure planning and to strive for those solutions that are high performers on energy supply, social, economic and conservation impact.

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